Double materiality is the conceptual foundation of CSRD compliance. Before a company can report under the Corporate Sustainability Reporting Directive, it must first conduct a double materiality assessment—a structured process that determines which sustainability topics are material enough to require disclosure.
For food businesses, the double materiality assessment has a predictable outcome: climate change, and specifically Scope 3 emissions from food procurement, is almost always material on both dimensions. Understanding why that's the case—and what the assessment process requires—is the starting point for credible CSRD preparation.
A double materiality assessment (DMA) is a structured evaluation of a company's sustainability topics through two distinct lenses:
Impact materiality (inside-out): How does the company's activity affect the environment and society? For food businesses, this means assessing the climate impact of ingredient sourcing, land use change from agricultural supply chains, water use, biodiversity impacts, and waste.
Financial materiality (outside-in): How do sustainability issues affect the company's financial performance, business model, and enterprise value? For food businesses, this means assessing how climate-related risks—supply chain disruption, commodity price volatility, regulatory costs—affect the business financially.
A topic is material under CSRD if it meets the threshold for impact materiality, financial materiality, or both. Companies must report on all topics identified as material through the assessment; they can only omit a topic if they can demonstrate and document that it is not material.
The DMA is mandatory under CSRD. It is governed by ESRS 1 (General Requirements) and ESRS 2 (General Disclosures), which require companies to disclose the process they used, the topics assessed, the outcomes, and the reasoning behind any exclusions. For a full breakdown of CSRD requirements, see CSRD for the Food Industry.
Traditional sustainability reporting frameworks used single materiality: a topic was considered relevant only if it had financial implications for the company. Climate change, under this approach, was material if it posed a financial risk—but a company's own contribution to climate change was not considered a reporting obligation unless it affected the bottom line.
Double materiality reverses that logic. Under CSRD, a company's impacts on the environment are reportable in their own right, regardless of whether those impacts carry direct financial consequences for the business today. This reflects a regulatory position that large companies have a disclosure obligation toward the society and environment they operate within, not only toward their investors.
For food businesses, this shift is significant. A caterer or food producer whose Scope 3 supply chain emissions are enormous but whose own operations face limited near-term climate financial risk would, under single materiality, have had limited disclosure obligations. Under double materiality, the scale of impact—not just financial exposure—triggers the requirement to report.
CSRD does not prescribe a specific methodology for the DMA, but ESRS 1 sets out the principles the assessment must follow. In practice, most organizations work through a sequence of steps:
The DMA must cover the company's own operations and its full value chain—upstream suppliers, downstream distributors, and end users where relevant. For food businesses, this means the assessment extends to agricultural suppliers, ingredient producers, and logistics partners, not just owned facilities.
Map the company's activities against the full list of ESRS topical standards; environmental (E1–E5), social (S1–S4), and governance (G1). The starting point is typically a longlist of all potentially relevant topics, which is then narrowed through the materiality assessment.
For each topic, evaluate the severity, scale, and probability of the company's actual and potential impacts on people and planet. Severity for environmental impacts is assessed in terms of scale, scope, and how reversible the damage is. For food businesses, the scale of agricultural supply chain emissions, land use change from sourcing decisions, and water intensity of ingredient production all feature prominently.
For each topic, evaluate the risks and opportunities it presents to the business—transition risks (regulatory costs, carbon pricing, changing consumer preferences), physical risks (supply disruption from climate events, crop failures), and opportunities (efficiency gains, market positioning, access to green financing). The time horizon matters: a topic may not carry near-term financial risk but could be financially material in the medium or long term.
A topic clears the materiality threshold if it meets the criteria for impact materiality, financial materiality, or both. The threshold is not a quantitative formula—it requires judgment, documented with clear reasoning.
ESRS 2 requires disclosure of the DMA process itself: who was involved, what sources were consulted, how stakeholders were engaged, and how the materiality thresholds were determined. The documentation must be sufficient to support third-party assurance.
For most sectors, the DMA outcome varies considerably by business model. For food businesses, the outcome on climate is close to predetermined on both dimensions.
On impact materiality: Food and agriculture account for approximately 25–30% of global greenhouse gas emissions. A food business's supply chain is, by definition, embedded in one of the highest-impact industries on the planet. Agricultural production, land use change, and food processing embedded in purchased ingredients represent a significant environmental impact for any business operating at scale in this sector.
On financial materiality: The food sector faces material climate-related financial risks across multiple categories. Physical risks include supply disruption from extreme weather events, yield volatility from shifting growing conditions, and long-term changes to the viability of agricultural regions. Transition risks include evolving regulatory requirements (CSRD itself, carbon border adjustment mechanisms, mandatory Scope 3 disclosure in supply chains), shifting procurement criteria from large corporate clients, and reputational exposure as transparency standards rise.
Under CSRD, a food business that concludes climate change is not material—and therefore omits ESRS E1 disclosure—would need to provide a detailed justification supported by its DMA documentation. In practice, most food businesses doing rigorous assessments reach the opposite conclusion. As the CSRD guidance states, for any company that cannot demonstrate climate is immaterial, a forward-looking analysis is required showing why it might not become material in the future. For food businesses, that argument is very difficult to sustain.
The practical implication is that food businesses should approach the DMA assuming climate and Scope 3 Category 1 will be material, and invest in building the underlying data infrastructure accordingly. The DMA process confirms materiality; the data work delivers what CSRD reporting then requires. See Sustainability Reporting for Food Businesses for the full reporting context.
Conducting a rigorous double materiality assessment requires engagement with actual emissions data, not estimates. Assessing impact materiality for Scope 3 Category 1 meaningfully requires knowing where the emissions sit—which ingredient categories, which suppliers, which sourcing regions drive the most impact. A generic acknowledgment that "food procurement is high-carbon" satisfies neither the DMA process nor the ESRS E1 disclosure requirements that follow from it.
For food businesses, this means building ingredient-level Scope 3 data before or alongside the DMA, not after. The data that informs a credible materiality assessment is the same data that satisfies CSRD disclosure requirements for climate. Building it once, to a methodology that supports both, is significantly more efficient than treating the DMA and the emissions calculation as sequential steps.
See How to Calculate Scope 3 Emissions for Food Businesses for the methodology detail, and Scope 3 Category 1 for Food Businesses for the data requirements specific to purchased ingredients.
Q: What is a double materiality assessment?
A: A double materiality assessment (DMA) is a structured process required under CSRD that evaluates sustainability topics through two lenses: how a company's activities impact the environment and society (impact materiality), and how sustainability issues affect the company's financial performance (financial materiality). A topic is material if it meets the threshold on either dimension. The DMA determines which ESRS standards a company must report against—topics identified as material cannot be omitted from CSRD disclosure. For food businesses, climate change and Scope 3 Category 1 emissions are almost always material on both dimensions. See CSRD for the Food Industry for how the DMA fits into the full reporting process.
Q: Is a double materiality assessment mandatory under CSRD?
A: Yes. The double materiality assessment is a mandatory requirement under CSRD, governed by ESRS 1 and ESRS 2. Every company in CSRD scope must conduct a DMA, disclose the process used, and report on all topics identified as material. Companies cannot omit a topic simply because it is complex or data-intensive—they can only omit it if the DMA demonstrates it is not material, with documented reasoning. For food businesses, omitting climate on materiality grounds is very difficult to justify given the sector's emissions profile and the financial risks associated with agricultural supply chains. See Corporate Carbon Accounting for Food Businesses for the data infrastructure that supports both the DMA and CSRD reporting.
Q: What is the difference between impact materiality and financial materiality?
A: Impact materiality (inside-out) refers to how a company's activities affect the environment and society—the scale, severity, and probability of its actual and potential impacts. Financial materiality (outside-in) refers to how sustainability issues affect the company's financial performance—through risks such as supply disruption, regulatory costs, and changing market conditions, or through opportunities such as efficiency gains and market positioning. Under CSRD's double materiality framework, a topic is reportable if it meets the threshold for either dimension. This contrasts with traditional single materiality, which required a topic to have financial implications for the company before it triggered a disclosure obligation. For food businesses, agricultural supply chain emissions typically meet both thresholds: they represent significant environmental impact and carry material financial risk through supply chain exposure and regulatory change.
Q: What is the difference between double materiality and single materiality?
A: Single materiality, used in traditional financial reporting frameworks, assesses whether a sustainability topic is material to the company's financial performance and value. A topic is relevant only if it affects the bottom line. Double materiality extends this by adding the inside-out dimension: how does the company affect the environment and society, regardless of whether that impact translates to financial consequences today? CSRD requires the double materiality approach, which means companies must report on their real-world environmental and social impacts, not only on the sustainability risks that threaten their enterprise value. For sectors like food and agriculture, where the environmental footprint is large but near-term financial exposure from that footprint may be unevenly distributed, double materiality significantly expands reporting obligations compared to single materiality frameworks.
Q: How does the double materiality assessment connect to Scope 3 reporting?
A: The DMA determines which Scope 3 categories a food business must report. Under CSRD, companies disclose all material Scope 3 categories; they can only exclude a category if the DMA demonstrates it is not material. For food businesses, Scope 3 Category 1 (purchased ingredients) is almost always material—it represents 80–95% of total emissions and carries both significant environmental impact and financial risk. The DMA process therefore typically confirms that Category 1 must be reported, at which point the data requirements of CSRD disclosure apply in full: activity-based calculation, traceable methodology, year-on-year comparison, and assurance-ready documentation. See Scope 3 Category 1 for Food Businesses for the calculation methodology and How to Calculate Scope 3 Emissions for the step-by-step process.
Q: Do smaller food businesses need to conduct a double materiality assessment?
A: The DMA is mandatory only for companies in CSRD scope. As of 2026, following the EU Omnibus revisions, CSRD applies to large companies meeting two of three thresholds: 250+ employees, €50M+ turnover, or €25M+ balance sheet. Listed SMEs, and non-EU companies with significant EU turnover, have separate timelines. However, food businesses outside direct CSRD scope are increasingly asked to provide structured emissions data by clients and buyers who are in scope—because Scope 3 Category 1 obligations flow upstream through supply chains. Understanding double materiality and building the underlying data is therefore commercially relevant for a broader set of food businesses than those with a formal CSRD deadline.
Q: How does the EU Omnibus proposal affect double materiality requirements?
A: The EU Omnibus package, adopted in late 2025, revised CSRD's scope and timelines but did not remove the double materiality assessment requirement. The DMA remains mandatory for all companies in CSRD scope. What changed is that some companies previously expected to enter scope have had their timelines revised or removed—reducing the total number of companies with immediate CSRD obligations. For food businesses already in scope or approaching their first reporting year, the DMA requirement is unchanged. See EU Omnibus and CSRD: What Changed for the full detail on scope changes.
Q: What data does a food business need to conduct a double materiality assessment?
A: A rigorous DMA for a food business requires: an understanding of which Scope 3 categories apply to the business and their estimated scale; an assessment of physical and transition climate risks relevant to the supply chain; stakeholder input from key internal and external parties; and documented reasoning for each materiality conclusion. The most data-intensive element is typically the impact materiality assessment for Scope 3 Category 1—understanding the scale of agricultural supply chain emissions requires ingredient-level procurement data mapped to food-specific emission factors. This is the same data required for CSRD Scope 3 disclosure, which is why building the data infrastructure alongside the DMA rather than after it is significantly more efficient. See Klimato Carbon Accounting for how Klimato supports this process.
Gioia Zagni
Chief Science Officer, Klimato
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For food businesses, the double materiality assessment almost always concludes that climate is material—which means the substantive work is building the ingredient-level Scope 3 data that CSRD disclosure then requires. The earlier that data foundation is in place, the more useful it is: it informs the DMA itself, satisfies ESRS E1 reporting, and supports the procurement decisions that reduce emissions over time.